For years now Google has played fast and loose with information confidentiality and privacy issues. As if further proof were needed, the PR disaster that is Buzz should be enough to firmly conclude that Google is not suitable for enterprise use-cases.
It is inconceivable that enterprise-focused vendors, be they niche specialists like Hyland, Open Text or Autonomy, or household names like Microsoft, IBM or Oracle, would ever contemplate the reckless move that Google undertook in deliberately exposing customers' private information to all and sundry with Buzz. Even if they did contemplate such a move, it would never have happened, as these firms not only have too many checks and balances to ensure it could not. But additionally they have a solid understanding that enterprise customers would simply not tolerate, or ever forgive such a move. It would be commercial suicide.
Google is a consumer company that makes a huge amount of money from selling online advertisements. The business model is predicated by the concept that popular equals good. The more hits the better; the more people accessing information the better. Basically Google is structured to support and develop "cool" functionality that will drive ever more online activity. But the world of the enterprise just isn't like that. In fact most of the time it is the exact opposite. It is a world that focuses on security, control, process, and accuracy.
Google's enterprise business income represents but a tiny fraction of overall revenues -- by some estimates less than 1%. There is simply no way that such an insignificant group will ever seriously challenge, let alone change, Google's popularity-driven development culture.
The ease of exposing a customer's private contact details (GMail has 175 million of them) quite naturally raises questions about the broader suitability of cloud computing for enterprise needs in and of itself. But I think to focus on that at the moment would be a mistake. More important right now is to focus on Google itself, a culture that has undervalued its customers' confidentiality and privacy. By default this makes Google unsuitable to meet the needs of the enterprise.